New BofA chairman must prove independence

Tags:

– Jonathan Ford is a Reuters columnist. The opinions expressed are his own –

Shareholders in Bank of America must be hugging themselves at their sheer audacity. They have plucked up the courage to say boo to Ken Lewis, the bank’s all-powerful chairman and chief executive.

A shareholder vote on April 29 forced Lewis to relinquish the first of those roles to an “independent chairman”. This role will now be taken by Walter Massey.

Their celebration, however, should be muted. Massey doesn’t seem very independent. He has been a director of BofA since 1998 and therefore participated in all the contentious decisions the board took during Lewis’s tenure as CEO, especially the financially crippling acquisitions of Countrywide Financial and Merrill Lynch.

So shareholders should put Massey under pressure to demonstrate whose side he is really on. And here are two suggestions as to how they might go about this.

First, shareholders should insist that the board cut Lewis’s compensation now that he has given up part of his responsibilities. Lewis has a base salary of $1.5 million, and notched up a further $275,000 in compensation last year, largely for personal use of a corporate jet. That could easily come down by a third or more.

Second, Massey and the board should conduct an independent review of the disastrous Merrill acquisition. In particular, he should get to the bottom of the dispute between BofA and former Merrill chief John Thain about the payment of $3.6 billion in accelerated bonuses to Merrill bankers. If Lewis has abused his position or lied, he must go at once.

The point is that Massey needs to remember why he was appointed. Against the board’s wishes, shareholders have insisted on an independent chairman. Massey needs to show that he is capable of fulfilling that role.

If the leadership in North Korea can’t pretend (even under a communist system) that the props in place are noting more than a hereditary monarchy in disguise, how can a corporation pretend to bow to the wishes for independent (meaning outside the established board of directors) by merely playing musical chairs amongst themselves?

This is not capitalism, free market leadership or even remotely democratic. It’s just another sad example of a corporado/politician/religious leader wrapping themselves in a corporate chater/flag/bible to justify activities that are a blatant abuse of the trust and responsibility of their position.

Don’t dare object, or their own homespun version of McCarthyism will lable and ruin you. Just shut up and let them raid the cookie jar until the money they loot is printed into worthlessness.

How can you suggest that Ken Lewis should have his pay reduced by a third due to a change in his duties?

That implies that his day-to-day job performance and his pay are actually connected in a real-world way.

I can agree that a commercial airline pilot should be paid more than a bus driver for safely delivering his passengers to their destination, but there is no one working for Bank of America who should be making more than $100,000/year right now… including Massey.

If either of those disgraced executives were honorable men, they would return all of the compensation they have received in the past several years to the shareholders, then commit hari kari after naming the shareholders as beneficiaries in their life insurance policies.

“The point is that Massey needs to remember why he was appointed. Against the board’s wishes, shareholders have insisted on an independent chairman. Massey needs to show that he is capable of fulfilling that role.”

Hardy, har, har. These boards are so incestuous it’s almost incomprehensible unless you have experienced it. The mere suggestion that some rubber stamp dildoe board member who woted for the Country Wide and Merrill mergers is even capable of doing anything independent let alone constructive is pure media propaganda aimed at reinforcing the illusion that the American system of coporate governence even marginally works. What a laugh.